Corporate Tax Reform Calculator

The United States has the highest corporate tax rate in the developed world, with little revenue collection to show for it. There is a growing consensus among lawmakers, economists, and business leaders that the U.S. corporate system is in need of retooling, with an emphasis on lowering the corporate tax rate and broadening the tax base.

With the Committee for a Responsible Federal Budget’s Corporate Tax Reform Calculator, users can learn more about how scaling back specific tax preferences and other changes can reduce the corporate tax rate in a fiscally responsible way.

A number of plans to reform the corporate code already exist, but see how your choices stack up!

Methodology

CRFB’s interactive Corporate Tax Reform Calculator is designed to help users understand how to reduce the corporate tax rates and make the corporate tax code more competitive without worsening the budget deficit. The options listed in the exercise are meant to represent a large but not exhaustive menu of the hard choices that policymakers might identify in order to finance the costs of rate reduction.

In general, the options in the exercise look only at the revenue generated from C-Corps (those businesses who pay taxes at the corporate rate), since only they benefit from the reduction in corporate rates. In some specified cases, however, the user may also raise taxes on pass-through entities such as Partnerships and S-Corps.

The effects of each option on the corporate tax rate have been estimated by the CRFB based primarily on data from the Joint Committee on Taxation. Calculations are based on ten year totals, and could differ substantially over a shorter or longer time period – particularly for provisions related to depreciation or amortization schedules.

Reducing corporate tax rates becomes more difficult with a broader tax base – since the revenue gained from cutting deductions is smaller when the rate is lower. To reflect this interaction, the Calculator makes rate reduction more expensive as the corporate base is broadened; however, this method only captures interactions on average rather than reflecting particular interactions between provisions.

For this and other reasons, outputs from the exercise should be taken as rough estimates.

Formula Debugger

Revenue Target from Reform

How Much More/Less Should Corporations Pay in Taxes?

$ Billions of Dollars over 10 years

You can make corporate tax reform lose (-) or raise (+) revenues. Proposals have ranged from revenue neutrality to raising or losing a few hundred billion dollars oven ten years. (Note: A $100 billion change roughly raises/lowers the corporate rate by 1%)